opinion
By Andile Ntingi
ECONOMY
The urgency of land reform finalisation
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Persistent uncertainty around government’s land reform policy debate could derail the entire project and prolong an investment strike into South Africa.
outh Africa’s land reform policy debate is so chaotic even whether the state pays for expropriated land or not. In such a regulatory experts on the topic appear to be confused, unsure where this set-up, courts will have no role to play. As things stand now, Section 25 merry-go-round circus is going. The Covid-19 pandemic has makes provision for land to only be expropriated after compensation is given us a small reprieve, but the show will no doubt continue agreed by affected parties and approved by a court of law. in the not too distant future. As the land reform debate rages on, the question that needs to Seasoned investors use the word “uncertainty” to describe chaos be posed is how feasible it is to expropriate land? To answer this and confusion that threaten market stability. In this case, large-scale, question, I have explored two case studies of England and Zimbabwe capital-intensive agriculture could be in the firing line if a drawn-out to understand how the land ownership took shape in those countries land debate leads to persistent uncertainty as investors struggle to after a colonial conquest. decipher the future. Uncertainty is dangerous because it kills investor Before England became a global colonial power, it too was invaded confidence and eventually the economy. and colonised. The invasion that had a lasting impact was During chaotic times, the wise thing to do is to in the 11th century when the Normans, French-speaking The failure has come at defer to history as the best teacher. descendants of the Vikings, invaded England in 1066 from a huge cost. According to agricultural economist Nick After placing its faith in the “willing buyer, willing Normandy, France, and defeated the native Anglo-Saxons. Vink, government has seller” (WBWS) land reform policy since 1994, SA’s More than 1 000 years on, Norman descendants hold spent close to government dumped the policy after it failed to the bulk of English lands to this day. According to an article meet the target of redistributing 30% of land to published by The Guardian in 2012, 66.6% of England’s black people by 2014, returning only 6.78% of land land remains in the hands of Norman descendants, who to its original owners. make up about 0.3% of England’s population. The policy was intended to reverse historical Since 1980, Zimbabwe’s land reform has undergone two on land reform since 1994. injustices committed during the colonial era in distinct phases. The first was initially based on the WBWS which blacks were dispossessed of their land by policy, which was partially funded by the British government early European settlers and later by descendants of the settlers during to acquire land from white farmers for black resettlement. the apartheid era. Between 1980 and 1987, 20% of land initially owned by white The reason the WBWS policy failed is two-pronged. Firstly, its impact farmers was transferred to black agricultural labourers. However, was slowed down by white farmers inflating prices on land bought by in the early 1990s, the Zimbabwean government announced new government and transferred to black beneficiary farmers. Secondly, many plans to quicken land reform through expropriating land with of the farms redistributed to blacks became unproductive as a majority of compensation, marking the beginning of a second phase of land the beneficiaries had no experience in commercial farming. reform to fast-track the process. In 1998, Zimbabwe began a The failure has come at a huge cost. According to agricultural process of amending its constitution to allow EWoC, abandoning economist Nick Vink, government has spent close to R69bn on expropriation with compensation. land reform since 1994. In 2000, liberation war veterans evicted between 2 000 The ditching of the WBWS policy marked the end and 3 500 white farmers, mostly British descendants, of implementation of the first phase of land reform from their farms. This collapsed Zimbabwe’s economy policy. A second phase is yet to kick in, but it will as investment capital left the country. take the form of expropriation of land, either with Having explored England’s and Zimbabwe’s land compensation or without. experiences, I am of the view that SA could end From 2017, the ruling ANC started debating up drifting into one of the extreme land ownership land expropriation to replace the failed WBWS policy. scenarios if drastic steps are not taken. Two strands of expropriation policy proposals began As SA transitions into the second phase of its to emerge within the party, with one camp favouring land reform, it should avoid falling into the trap that expropriation without compensation (EWoC) and another Zimbabwe fell into. This can be done by transferring land supporting expropriation with compensation. to skilled black farmers instead of politically connected people The key difference between the two schools of thought is that with no skills. EWoC will require amending Section 25 of the Constitution while I suspect government will use expropriation policies to find land for supporters of expropriation with compensation initially envisaged urban housing development to ease housing backlogs in major cities introduction of a valuer-general, who would determine the value and will tread carefully not to threaten food security by expropriating (or compensation) of land earmarked for expropriation to counter productive commercial farms. ■ government acquiring land at inflated prices. editorial@finweek.co.za Recently, a third strand of expropriation emerged, whereby the ANC Andile Ntingi is the chief executive and co-founder of GetBiz, an e-procurement and tender proposes that the minister of land reform must be the sole arbiter on notification service.
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R69bn
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finweek 7 May 2020
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